Charts of the Day
Thanks to another 2.3% rise on Friday, the S&P 500 energy sector has risen by 16% in the past month. Its relative performance since the pandemic is still disappointing though, tying with utilities for the lowest gain over the period in the single digits. Tech stocks and real estate performed worst in the past month, both falling due to their sensitivity to rising interest rates. Markets are now pricing in a decent amount of steepening, but even Fed official have provided some suggestions that this won’t be enough – so the worry is there are further falls to come.
Macro
US retail sales fell by 1.9% MoM in December, while control group retail sales – which feed into the GDP data for consumption – fell by 3.1%. On a YoY basis, retail sales were still up by 16.9%.
The eurozone goods trade balance is now a deficit again, due to rising domestic demand, weak vehicle exports from key countries like Germany, and higher imported energy prices.
China reported that GDP growth fell to 4.0% YoY in Q4, weaker than before the pandemic.
In China, retail sales growth fell to a much weaker than expected 1.7% YoY in December, while industrial production growth increased to stronger than expected 4.3% YoY. External demand is therefore helping to make up for weakening domestic demand, but can that last?
Markets
Traders have gotten less bearish on the Russell 2000, with positioning moving toward neutral.
While the USD has weakened lately, positioning is still relatively long.
The relationship between EURUSD and yield differentials continues to work in the opposite way to expected.
The HK Hang Seng was one of the top global performers in the past week, even though the Shanghai SE was one of the weakest.
Like what you see? Please forward this email to your friends and colleagues, or use the button below to share it on social media. They can also follow us https://twitter.com/macro_daily
